Exclusive - Intel TV creator leaves Verizon months after deal

An Intel logo is seen at the company's offices in Petah Tikva, near Tel Aviv October 24, 2011. REUTERS/Nir Elias

SAN FRANCISCO/NEW YORK (Reuters) - Erik Huggers is leaving Verizon Communications Inc (VZ.N) just five months after joining the company via the acquisition of the Intel Corp (INTC.O) “OnCue” streaming service he developed, signaling the communications giant’s waning interest in providing an Internet-delivered TV service.

The former BBC executive, who told Reuters on Friday he is departing the company, had worked on OnCue for Intel for more than two years before Verizon bought it in January to accelerate a push into video services, including TV channels delivered over the Internet, known as an “over the top”, or OTT, service.

While other companies have been talking up their plans to deliver such a service, a source familiar with the matter said that Verizon was now moving away from the OTT strategy and that the departure of Huggers, who was a proponent of an Internet-only service, reflected that.

A Verizon spokesman confirmed Huggers’ departure and in regards to its strategy said, “We obtained a strong combination of technological and personnel assets from Intel Media. We intend to strategically utilize the OnCue technology and talent going forward to grow our business. That has not changed.”

Verizon had previously said OnCue would help it offer video over its Fios fiber-optic infrastructure as well.

Seen by some as a bold attempt to revolutionize TV and others as a distraction from Intel’s chip business, Intel CEO Brian Krzanich pulled the plug and put the unit up for sale before it was launched.

Intel’s retreat from streaming TV was a disappointment to people in Silicon Valley who hoped the technology company could break open a market tightly controlled by a handful of cable and entertainment conglomerates.

With the acquisition, Huggers and many of his employees moved over to Verizon, where he hoped to launch the service to consumers. But he told Reuters he advised his staff on Thursday that he was leaving the company.

Huggers said in an interview he had worked well with his immediate boss at Verizon, Marni Walden, recently appointed to head product development, as well as Verizon CEO Lowell McAdam.

”There were no conflicts at all. The technology is great, the team is great, the future is secure, the dream lives on. It’s time to hand the baby over to someone else,” he said.

Verizon’s rivals are working on their own Internet TV services. AT&T Inc (T.N), which made an offer to buy DirecTV last week in a $45.5 billion deal, has said it would take 12 to 18 months for the combined companies to come up with an over-the-top service.

Dish Network Corp (DISH.O) has said it expects to launch its personalized streaming product by year-end, having already struck a deal for programming from Walt Disney Co (DIS.N).

Reporting by Noel Randewich in San Francisco and Liana B. Baker in New York; Editing by Marguerita Choy